Tag: wealth tax

The Limits of Taxing the Rich

Mary Pat Campbell

Link:https://manhattan.institute/article/the-limits-of-taxing-the-rich

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Sanders’s agenda is not limited to taxes on corporations and wealthy families. The campaign also proposed to partially finance Medicare-for-All through 4.6% of GDP in new tax revenues from broad-based payroll taxes and tax-preference eliminations (within health care). However, even if one uses the inflated revenue figure of 8.6% of GDP (4.0% from the wealthy and 4.6% from broad-based taxes), it still falls far short of financing Sanders’s spending promises. Sanders proposed $23 trillion in new taxes over the 2021–30 period, yet also proposed a $30 trillion Medicare-for-All plan, $30 trillion government job guarantee, $16 trillion climate initiative, and $11 trillion for free public college tuition, full student-loan forgiveness, Social Security expansion, housing, infrastructure, paid family leave, and K–12 education. That is $87 trillion in spending promises, on top of a baseline budget deficit that, at the time, was forecast at $13 trillion over the decade.[104] Even the rosiest revenue estimates of Sanders’s tax policies would cover only a small fraction of his spending promises (see Figure 9).

At the same time, Sanders has obfuscated the funding shortfall by: 1) regularly claiming that his tax policies can cover all his spending promises, even as official scores show otherwise; and 2) proposing most spending increases separately, in order to make each one appear individually affordable within his broader tax agenda.

Summary: Some progressives suggest that Bernie Sanders has identified extraordinary potential revenues from taxing the rich. However, his proposed tax increases on corporations and wealthy individuals show revenues of 4% of GDP—and that is before accounting for constitutional challenges and unrealistic tax rates that far exceed the consensus of revenue-maximizing rates. Given behavioral and economic responses, the total potential tax revenues are (at most) 2% of GDP, and possibly far less. Indeed, leading progressive tax officials assume plausible tax rates and revenues far below those of Sanders’s proposals. Even assuming Sanders’s full static revenue estimate and including his steep middle-class tax proposals would not come close to paying for his spending agenda. The contention that Sanders has unlocked an enormous tax-the-rich revenue source is false.

Author(s): Brian Riedl

Publication Date: 21 Sept 2023

Publication Site: Manhattan Institute

The Rich Aren’t Rich Enough to Balance the Federal Budget

Mary Pat Campbell

Link:https://www.wsj.com/articles/the-rich-arent-rich-enough-to-balance-the-federal-budget-with-tax-increases-60969410

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As budget deficits surge toward the stratosphere, Congress will soon have to get serious about savings proposals. Yet reforming Social Security and Medicare—the leading drivers of long-term deficits—remains a political nonstarter. Neither party is willing to raise middle-class taxes. And cutting defense and social spending would save at most $200 billion annually from deficits that are projected to approach $3 trillion by 2034.

That leaves one option: Tax the rich. It won’t be nearly enough.

There are a few excessive tax loopholes and undertaxed corporations that lawmakers could address. It’s farcical, however, to suggest that the tax-the-rich pot of gold is large enough to rein in our deficits and finance new spending programs. Seizing every dollar of income earned over $500,000 wouldn’t balance the budget. Liquidating every dollar of billionaire wealth would fund the federal government for only nine months.

In a study for the Manhattan Institute, I set upper-income tax rates at their revenue-maximizing level, while paring back tax loopholes and fighting tax evasion. As background, the Congressional Budget Office projects that our budget deficits—which currently exceed 7% of gross domestic project—will surpass 10% of GDP over the next three decades. My research shows that the “tax the rich” model would raise at most 2% of GDP in additional revenue over the long term.

Author(s): Brian Riedl

Publication Date: 22 Jan 2024

Publication Site: WSJ, op-ed

First We Get the Money…:$12 Billion to Fund a Just Chicago

Mary Pat Campbell

Link: https://www.scribd.com/document/645874607/First-We-Get-the-Money-FINAL-v3#

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Reinstitute the big business head tax: Mayor Johnson should reinstitute the big business head tax to make large corporations pay what they owe for benefiting from the city’s public infrastructure. The head tax existed previously in Chicago, until Mayor Rahm Emanuel eliminated it as a handout to corporations.3 Reinstating the head tax at a level of $33 per employee per year would generate $106 million a year in new revenue.4

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Institute a city income tax on high earners: Mayor Johnson should lobby Springfield to give the city the authority to institute a municipal income tax on high earners who live or work in the city. A 3.5% tax on household income above $100,000 would bring in an estimated $2.1 billion a year in new revenue, of which $1.6 billion would be from high-earning Chicagoans and $490 million from high-earning commuters.16 By way of comparison, New York and Philadelphia both have municipal income taxes with top rates above 3.7%.17 By exempting the first $100,000 of income from the tax, the city could ensure the tax is progressive without a change in the state constitution.

  Institute a luxury apartment vacancy fee: Mayor Johnson should work withstate officials to implement a vacancy fee on large, luxury apartment buildings with units that sit vacant for more than 12 months at a time. Landlords who own more than 20 units and are asking for a monthly rental price that exceeds the 75th percentile in the city (based on the number of bedrooms) must pay a fee equal to the median rental price in the city on each unit that sits vacant for more than 12 consecutive months, if more than three units in the building sit vacant for more than 12 consecutive months. This would encourage luxury developers to charge more affordable rents that can maintain higher occupancy rates. This policy is designed to encourage landlords to lower rents to avoid having to pay the fee; thus, if it works as intended, we hope that it would eventually not produce any revenue for the city but that it would increase affordable housing options.

Author(s): Saqib Bhatti, Gabriela Noa Betancourt

Publication Date: May 2023

Publication Site: Scribd

EXECUTIVE EXCESS 2022

Mary Pat Campbell

Link: https://ips-dc.org/report-executive-excess-2022/

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  • Taxpayer dollars are fueling corporations with extreme CEO-worker pay gaps.
    • Of the 300 companies in our sample, 40 percent received federal contracts between October 1, 2019 and May 1, 2022. The combined value of these contracts was $37.2 billion.
    • At these low-wage contractors, the average CEO-worker pay ratio hit 571 to 1 in 2021. Only 6 of the 119 contractors had pay gaps of less than 100 to 1.
  • Policy solutions for runaway CEO pay do exist — and enjoy broad support.
    • Some 62 percent of Republicans and 75 percent of Democrats support an outright cap on CEO pay relative to worker pay.
    • While a hard cap is unlikely, other CEO pay reforms have also gained traction in recent years. These reforms focus on three key areas:
      • CEO pay ratio incentives for federal contractors
      • Excessive CEO pay taxes
      • Stock buyback restrictions and taxes

Author(s): SARAH ANDERSON | SAM PIZZIGATI | BRIAN WAKAMO

Publication Date: Accessed 10 June 2022

Publication Site: Institute for Policy Studies

Nancy Pelosi Says a Wealth Tax on Billionaires’ Unrealized Gains is On the Way

Mary Pat Campbell

Link:https://mishtalk.com/economics/nancy-pelosi-says-a-wealth-tax-on-billionaires-unrealized-gains-is-on-the-way

Excerpt:

In the scramble to find a tax hike that all 50 Democrat Senators could support, Senator Kyrsten Sinema OKs a Tax on Billionaires’ Unrealized Gains.

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The proposal by Senator Elizabeth Warren is a genuine wealth tax and easily could be tossed by the Supreme Court.  Warren obviously does not give a damn. 

Regardless, expect legal challenges based on the 16th Amendment.

The proposal taxes unrealized gains. But is there “income” before gains are realized? The courts will decide if this goes forward, but the idea is dubious at best.

Author(s): Mike Shedlock

Publication Date: 24 Oct 2021

Publication Site: MishTalk

What is good tax policy?

Mary Pat Campbell

Link: https://allisonschrager.substack.com/p/known-unknowns-1c3?utm_medium=email&utm_campaign=cta

Excerpt:

So the goal of tax policy should be taking as much revenue as you can while trying to minimize distortions. Some kinds of taxes are more distortionary than others. In order of least to most harmful, it goes

1.     Consumption taxes

2.     Income taxes

3.     Wealth taxes

Cut to our current tax debate, where these concerns get no attention. The goal seems less about minimizing distortions/maximizing revenue and more about punishment, i.e., rich people for making too much in a zero-sum world and corporations for being greedy. Now, I think our tax system should be more progressive, too. But there are good and bad ways to achieve that goal.

Author(s): Allison Schrager

Publication Date: 6 July 2021

Publication Site: Known Unknowns at substack

ProPublica’s Plan for a Poorer America

Mary Pat Campbell

Link: https://www.wsj.com/articles/propublicas-plan-for-a-poorer-america-11623881781?st=0g4wamiq5m5ces3&reflink=desktopwebshare_twitter

Excerpt:

ProPublica substitutes a magazine’s estimate of wealth appreciation, which never appears on the stolen tax returns, to falsify income. Using this deception the site calculates its “true tax rate.” ProPublica laments that taxpayers are acting “perfectly legally” in not paying a federal wealth tax, which doesn’t exist.

That wealth is taxed only when converted into income or on death may be an outrage to those in government who want to spend that wealth, but it is a purposeful, enlightened policy that lets wealth work as the nation’s seed corn, making America the richest nation in the history of the world. That wealth in turn makes it possible for the government today to provide $45,000 a year in transfer payments to the average household in the bottom 20% of American earners.

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Taxing wealth accumulation will mean less wealth accumulation, lower productivity growth, lower wages and a less prosperous America. If you had to pay a federal property tax on the appreciation of your home and the growth in the value of your retirement assets, farm and business every year, how could you or America ever get ahead? Private investment has created $32 trillion of equity wealth in America. “Public investment” has created $21 trillion of public debt.

Author(s): Phil Gramm, Mike Solon

Publication Date: 16 June 2021

Publication Site: Wall Street Journal

Return of the IRS Scandal

Mary Pat Campbell

Link: https://www.wsj.com/amp/articles/return-of-the-irs-scandal-11623191964

Excerpt:

 Less than half a year into the Biden Presidency, the Internal Revenue Service is already at the center of an abuse-of-power scandal. That news broke Tuesday when ProPublica, a website whose journalism promotes progressive causes, published information from what it said are 15 years of the tax returns of Jeff Bezos, Warren Buffett and other rich Americans.

Leaking such information is a crime, since under federal law tax returns are confidential. ProPublica says it received the files from “an anonymous source” and doesn’t know who provided them, how they were obtained, or what the source’s motives are.

Allow us to fill in that last blank. The story arrives amid the Biden Administration’s effort to pass the largest tax increase as a share of the economy since 1968. The main Democratic argument for a tax hike is that the rich should pay their “fair share.” The ProPublica story is a long argument that somehow the rich don’t pay enough. The timing here is no coincidence, comrade.

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This still leaves the real scandal, which is that someone leaked confidential IRS information about individuals to serve a political agenda. This is the same tax agency that pursued a vendetta against conservative nonprofit groups during the Obama Administration. Remember Lois Lerner?

This is also the same IRS that Democrats now want to infuse with $80 billion more to chase a fanciful amount of uncollected taxes. As part of this effort, Mr. Biden wants the IRS to collect “gross inflows and outflows on all business and personal accounts from financial institutions.” Why? So the information can be leaked to ProPublica?

Author(s): Editorial board of WSJ

Publication Date: 8 June 2021

Publication Site: Wall Street Journal

The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax

Mary Pat Campbell

Link: https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax

Methodology: https://www.propublica.org/article/how-we-calculated-the-true-tax-rates-of-the-wealthiest

On legality etc: https://www.propublica.org/article/why-we-are-publishing-the-tax-secrets-of-the-001

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ProPublica has obtained a vast cache of IRS information showing how billionaires like Jeff Bezos, Elon Musk and Warren Buffett pay little in income tax compared to their massive wealth — sometimes, even nothing.

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In 2011, a year in which his wealth held roughly steady at $18 billion, Bezos filed a tax return reporting he lost money — his income that year was more than offset by investment losses. What’s more, because, according to the tax law, he made so little, he even claimed and received a $4,000 tax credit for his children.

His tax avoidance is even more striking if you examine 2006 to 2018, a period for which ProPublica has complete data. Bezos’ wealth increased by $127 billion, according to Forbes, but he reported a total of $6.5 billion in income. The $1.4 billion he paid in personal federal taxes is a massive number — yet it amounts to a 1.1% true tax rate on the rise in his fortune.

Author(s): Jesse Eisinger, Jeff Ernsthausen, Paul Kiel

Publication Date: 8 June 2021

Publication Site: ProPublica

Warren’s Wealth Tax Enriches Foreign Billionaires

Mary Pat Campbell

Link: https://www.wsj.com/articles/warrens-wealth-tax-enriches-foreign-billionaires-11615227317

Excerpt:

According to estimates conducted for Ms. Warren by University of California-Berkeley economists Emmanuel Saez and Gabriel Zucman, only about 100,000 families, or “less than 1 out of 1,000,” would pay the tax, which they estimate would raise “around $3 trillion over the ten-year budget window 2023-2032, of which $0.4 trillion would come from the billionaire 1% surtax.”

Yet Tax Foundation economists discovered a surprising consequence when we ran the proposal through our general equilibrium tax model last year. The model showed that despite being a massive tax, raising nearly $300 billion a year, the tax had only a modest impact on gross domestic product. How can that be?

The model predicted that wealthy U.S. citizens would sell their assets at fire-sale prices to pay the tax. Because the U.S. is an open economy, many of these assets would be bought by foreign investors at the discounted prices. Thus, while a wealth tax wouldn’t shrink the U.S. economy much, it would change who owns U.S. assets. What Jeff Bezos, Warren Buffett and Mark Zuckerberg sell, Jack Ma, Carlos Slim and the sultan of Brunei might buy — and they’d be exempt from the U.S. wealth tax.

Author(s): Scott A. Hodge

Publication Date: 8 March 2021

Publication Site: Wall Street Journal

Elizabeth Warren’s wealth tax won’t work. This will

Mary Pat Campbell

Link: https://money.yahoo.com/elizabeth-warrens-wealth-tax-wont-work-this-will-200020382.html

Excerpt:

Biden also wants other big tax changes, such as a higher business tax rate and higher rates for households earning more than $400,000. But he might want to start with capital-gains and estate taxes because they’re easier to target at the wealthy. The top 1% of earners capture 69% of long-term capital gains, while the top 20% of earners earn 90% of the capital gains. That shareholder class has benefited most from fiscal and monetary stimulus that has propped up the stock market for the last 11 months and helped with a decade of generous gains. If anybody can afford it, they can.

As for the estate tax, only about 1,900 U.S. estates are subject to any federal tax, which is less than one-tenth of 1% of the Americans who die in a given year. The number of estates subject to this tax was three times higher in 2009, the last year the exemption threshold was $3.5 million. Since Biden wants to return to that ceiling, assume he’d triple the number of families having to pay some estate tax. It still remains a vanishingly small number. Plus, unlike the wealth tax, it has been the law before, and there’s no question of whether it would work.

Author(s): Rick Newman

Publication Date: 2 March 2021

Publication Site: Yahoo Finance

Elizabeth Warren Still Wants a Wealth Tax. It Still Won’t Work.

Mary Pat Campbell
Elizabeth Warren Still Wants a Wealth Tax. It Still Won’t Work.

Excerpt:

Warren is spending this week talking up her “Ultra-Millionaire Tax Act.” It’s essentially a refreshed version of the same idea she proposed during her failed bid for the Democratic presidential nomination. The current measure, like the old one, would tax the net worth of American households with more than $50 million in assets to the tune of 2 percent annually, with an additional 1 percent tax for households worth more than $1 billion. Warren favored the wealth tax in 2019 when the economy was generally doing pretty well. But now, she says, it’s needed “because of the changes in this country under the pandemic.”

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Yellen is right, by the way, that Warren’s plan would have “implementation problems.” That’s a polite way of saying it wouldn’t work. The wealthy tend to have difficult-to-value assets, and forcing the IRS to value them every year in order to assess the tax would, in the words of one tax expert, be an “administrative nightmare.” 

Author(s): Peter Suderman

Publication Date: 2 March 2021

Publication Site: Reason